Why should I care about governance?

My favourite definition of governance comes from the Institute on Governance: governance is “the process whereby societies or organisations make important decisions, determine whom they involve and how they render account”.

Organisations that don’t address governance end up spending a lot of time on it. They discuss it over and over again for each decision as they argue about due process and decision rights and accountabilities. They end up with little energy for the decision itself. So they make bad decisions.

Imagine this scenario: you run the website for a transport utility, and bad weather has closed most of the major routes across the region. All your services are disrupted. Traffic on the website is growing by the minute as commuters try to find out what’s going on.

Your servers are about to fall apart under the strain, but you need to get a new timetable onto the site. There’s a bunch of briefings for the press that need to go out. You need to set up a space for the disaster response team to share materials. Half your team is out of action…

The last thing you need is governance police, talking about compliance, policies and approval processes. Right?

Right.
But you do need good governance. You need to make a lot of decisions, and you need to make them quickly. That’s what governance is about: good decision-making.

Governance is about four things:

Identifying the important decisions

People make hundreds of decisions every day. Only a small number of those have a big impact on organisational goals. Good governance identifies those important decisions and ensures that’s where we focus our energy.

Getting the right people involved in decisions

Go back to our crisis at the transport utility: you don’t need disputes about who has authority to change the timetables. The lines of authority need to be spelled out clearly so you can act. If you need to consult more widely, you need to know who must be involved and how to involve them. You don’t have time to make it up as you go along.

Following the agreed process for decisions

This has two effects. First, it tells you how to make a good decision. You don’t need to spend time thinking about how to gather information and define decision criteria. This is already done, so you can focus your energy on gathering the data, analysing the options and making the decision.

Second, it lends legitimacy to that decision. People can see that you’ve followed the agreed process, so they’re less likely to challenge the outcome. The last thing you need is to keep revisiting old decisions as people challenge their legitimacy.

Accounting for the outcomes of decisions

This is about feedback, not blame. It’s about monitoring outcomes and hence refining decisions as you learn more. No-one can make perfect decisions all the time, especially with fuzzy data and while under enormous time pressure.

But we can monitor and correct for the effects of imperfect decisions. Good governance creates a framework for this.

Good governance enables organisations to make effective decisions. It ensures they make those decisions in an efficient way. And it ensures they track outcomes and hence steer towards the desired goals.

Conversely, when governance is weak, we see:

Misdirected effort

People get pulled into decisions that don’t concern them or that could be made more effectively by others. They argue about things that have little effect on overall outcomes, leaving less time to think about the important stuff.

Wasted effort

People spend time defining bespoke decision-making processes for every decision. They spend time identifying who needs to be consulted. They fight about decision rights. Instead of gathering information and identifying options, people spend their time on politicking and indecision.

Decisions that don’t stick

People undermine decisions they consider to be illegitimate. They delay action by appealing to “higher authority”. They waste energy by constantly reopening old decisions. Different parts of the organisation act at cross-purposes, wasting yet more effort and confusing customers and other stakeholders.

Poor decisions

Decisions are made without appropriate analysis. Options are overlooked. Key stakeholders are ignored. At worst, decisions align to power bases rather than organisational objectives.

Lack of feedback

No-one monitors outcomes, so poor decisions aren’t identified and fixed. And the criteria which were used to make those poor decisions aren’t fixed, ensuring that future decisions will be made poorly too.

Back to the opening scenario: you need to decide quickly and act. This is as true in day-to-day operations as it is in a crisis.That’s why you should care about governance.

Comments (3)

A good read Graham and very true in my opinion. Working for a company that operates in the Governance, Risk & Compliance space I think your points are very valid. Particularly your last one that many organisations do not care for monitoring outcomes of bad decisions. By doing so they would be able to take corrective and preventative actions far more effectively.

Hi GRAHAM,
It is the most purified and best definition of governance that provided by you in the start of this article. The information, provided by you is good and nice research as well. After reading this article i would like to share my opinion too. I feel that all of we know the merits and demerits of governance but problem occurs when we think that we are perfect and fault is somewhere else. If we understand the definition that provided by you, we will come to know that there are many things or mistakes that we perform and again we say, we are the best. So, just understanding of meaning is not enough, we should also act upon it. If you observe than actually my focus is on last point of your article that also we know our faults but do not try to remove.

In web operations, the field in which I operate, the governance framework is likely to include people from different countries and time zones. This makes clarity of responsibility and established process especially important.

I’ve worked with a number of large organisations on their web governance. The upfront investment of time involved in defining and articulating the government framework always pays off. One of the key benefits of going through this process is that it exposes any ‘black holes’ or potential risks in the current system. This means you can address these issues in a controlled way, rather than being ambushed by them in a time of crisis.

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